The group reported an order intake of £20.26bn in 2017, down from £22.44bn the previous year, and a backlog worth £41.2bn down from £42bn.

Net cash flow from operating activities increased by £668m to £1.9bn.

BAE Systems' dividend increased 2% to 21.8p from 21.3p.

The firm said it expects the group's underlying earnings per share in 2018 to be in line with full-year underlying earnings per share in 2017 of 42.1p.

Charles Woodburn, Chief Executive, said: 'We delivered a good performance in 2017, consistent with our expectations for the year.'

'We start 2018 with a streamlined organisation and a strong focus on programme execution, technology and enhanced competitiveness, providing a solid foundation for medium-term growth. With an improving outlook for defence budgets in a number of our markets, we are well placed to generate good returns for shareholders'